Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Employee Stock Purchase Plan

In May 2017, the Company’s stockholders approved the 2016 Employee Stock Purchase Plan (the 2016 ESPP). The 2016 ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (IRC), and is not subject to the provisions of the Employee Retirement Income Security Act of 1974. The Company reserved 800,000 shares of common stock for issuance under the 2016 ESPP. The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The 2016 ESPP provides for six-month offering periods ending on May 31 and November 30 of each year. At the end of each offering period, employees are able to purchase shares at 85% of the fair market value of the Company’s common stock on the last day of the offering period. During the three months ended March 31, 2024, no shares of common stock were purchased under the 2016 ESPP.

Employee Stock Incentive Plans

In October 2013, the Company implemented the 2013 Equity Incentive Plan (2013 Plan). The 2013 Plan provides for the grant of stock options and other stock-based awards, as well as cash-based performance awards. In May 2023, the 2013 Plan was terminated, and no further awards may be issued under the plan. If an option granted under the 2013 Plan expires or terminates for any reason without having been fully exercised, if any shares of restricted stock are forfeited, or if any award terminates, expires or is settled without all or a portion of the shares of common stock covered by the award being issued, such shares will become available for issuance under the 2023 Equity Incentive Plan (2023 Plan).

The 2023 Plan was effective as of stockholder approval in May 2023. The 2023 Plan provides for grants of stock options and other stock-based awards, as well as cash-based performance awards. Initially, the maximum number of shares of the Company’s common stock that may be issued under the 2023 Plan will not exceed 4,850,000 shares. If an option expires or terminates for any reason without having been fully exercised, if any shares of restricted stock are forfeited, or if any award terminates, expires or is settled without all or a portion of the shares of common stock covered by the award being issued, such shares are available for the grant of additional awards. However, any shares that are withheld (or delivered) to pay withholding taxes or to pay the exercise price of an option are not available for the grant of additional awards.

The following stock-based compensation expense was recognized for the periods indicated (in thousands):


	Three Months Ended March 31,
		2024		2023
Research and development		$	2,829	$	2,461
Selling, general and administrative		2,724		2,372
Total stock-based compensation expense		$	5,553	$	4,833

Employee stock options

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions in the following table for options issued during the period indicated:


	Three Months Ended March 31,
	2024	2023
Expected dividend yield	0%	0%
Expected volatility	94.9% -95.5%	92.6% - 94.3%
Risk-free interest rate	4.0% - 4.4%	3.6% - 4.2%
Expected term	6.06 years	5.88 years

The following table summarizes stock option activity during the three months ended March 31, 2024:


	Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2023	12,223,637	$	15.11	6.7
Granted	1,654,555	17.99
Exercised	(257,683)	10.24
Forfeited	(22,343)	11.04
Expired	(23,810)	23.99
Outstanding, March 31, 2024	13,574,356	15.54		6.8	$	46,445
As of March 31, 2024:
Exercisable	8,150,261	18.58		5.5	18,242
Vested and expected to vest	12,411,841	15.98		6.6	40,279

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2024 and 2023 was $14.17 and $3.77, respectively. The total intrinsic value of options exercised during the three months ended March 31, 2024 was $1.9 million and de minimis for the three months ended March 31, 2023. The total cash received for options exercised during the three months ended March 31, 2024 was $2.6 million and was de minimis for the three months ended March 31, 2023. The total fair value of shares vested in the three months ended March 31, 2024 and 2023 was approximately $3.9 million and $4.4 million, respectively. As of March 31, 2024, the total unrecognized compensation expense related to unvested stock options, net of related forfeiture estimates, was approximately $34.7 million, which the Company expects to recognize over a weighted-average period of approximately 1.6 years.

Restricted Stock Units

Restricted stock units (RSUs) are valued based on the closing price of the Company’s common stock on the date of the grant. The fair value of RSUs is recognized and amortized on a straight-line basis over the requisite service period of the award.

The following table summarizes RSU activity during the three months ended March 31, 2024:


	Shares	Weighted-Average Grant Date Fair Value
Outstanding, December 31, 2023	905,614	$	5.97
Granted	591,215	18.30
Vested	(370,891)	7.21
Forfeited	(3,828)	12.80
Outstanding, March 31, 2024	1,122,110	12.03

At March 31, 2024, there was $10.3 million of total unrecognized compensation cost related to unvested RSUs, which the Company expects to recognize over a remaining weighted-average period of approximately 1.8 years.